Ok say you bought a property using and FHA loan with 3.5% down. You must owner occupy for a year and after that year you plan on refinancing the loan into a conventional mortgage in order to free up the opportunity to purchase another property using a FHA loan(only allowed one FHA loan at a time). During the year that you live there from mortgage payments made and appreciation via rehab, inflation, and demand you have built up to a 20% equity status in the property(after doing some research I have found that generally a lender will not refinance an FHA loan into a conventional loan until you have 20% equity). The question is does the fact that the property has increased 20% in equity from other means besides mortgage payments would this still qualify as the 20%? This may be so obvious that I am over thinking it but who knows this might be something that would be beneficial to know as you pyramid up using a combination of FHA and conventional loans.
My question has been answered but for those who may be interested in this question I will say that the answer is yes it is treated as if you then had 20% in equity.
Also lenders will finance you from an FHA loan to conventional without 20% equity. It comes down to the Tangible Net Benefit. If there is enough savings, cash out, shortened term, adjustable to fixed, or some other reasonable benefit it can be done.
What about if this was a rehab and the refi loan would account for the new ARV?
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